With the successes of the Ukrainian army sentiment on the markets improved a little at the start of the week. However, Antje Praefcke, FX and EM Analyst at Commerzbank, is sceptical. The worst may yet be to come.

The more the ECB does its frontloading, the less might follow at a later stage

“I am cautious with a view to the ECB and positive reactions of the euro in response to hawkish comments. The more the ECB does its frontloading, i.e. hiking the key rate short-term, the less might follow at a later stage. Above all, if the economy deteriorates significantly in the winter as a result of an energy crisis. Moreover, the ECB will have to deliver first what the market is pricing in.”

“The worst – in the shape of a tough winter with tight energy supplies and a recession which will cause the ECB to become more cautious again – may yet be to come. Even though I would, of course, be relieved if we were able to avoid that.”